BILL NUMBER: SB 1814	CHAPTERED  09/27/00

	CHAPTER   707
	FILED WITH SECRETARY OF STATE   SEPTEMBER 27, 2000
	APPROVED BY GOVERNOR   SEPTEMBER 25, 2000
	PASSED THE SENATE   AUGUST 31, 2000
	PASSED THE ASSEMBLY   AUGUST 29, 2000
	AMENDED IN ASSEMBLY   AUGUST 28, 2000
	AMENDED IN ASSEMBLY   AUGUST 18, 2000
	AMENDED IN ASSEMBLY   JULY 6, 2000
	AMENDED IN ASSEMBLY   JUNE 20, 2000

INTRODUCED BY   Senator Speier

                        FEBRUARY 24, 2000

   An act to amend Sections 1358.11 and 1358.12 of, and to add and
repeal Section 1358.22 of, the Health and Safety Code, and to amend
Sections 10192.11, 10192.12, and 10192.20 of, and to add and repeal
Section 10194.9 of, the Insurance Code, relating to health insurance,
and declaring the urgency thereof, to take effect immediately.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 1814, Speier.  Insurance:  Medicare supplement:  rate guide.
   (1) Existing law provides that each Medicare supplement contract
currently available from an issuer shall be made available to any
person who submits an application prior to or during the 6-month
period after he or she reaches age 65 and who is enrolled for
benefits under Medicare Part B, and prohibits discrimination in the
pricing of a contract because of the health status or medical
condition of an applicant.
   This bill would exclude those applicants who are 64 years and
younger and have End-Stage Renal Disease.  The bill would permit an
issuer of a Medicare supplement contract to treat applicants who are
under 65 years of age and are eligible for Medicare Part B as a
separate risk classification.
   (2) Existing law provides that an individual enrolled in Medicare
Part B by reason of disability is entitled to open enrollment, as
specified, for 6 months after he or she reaches age 65.
   This bill would change the eligibility to 6 months after the
person first becomes eligible for Medicare Part B, and would provide
for a one-time open enrollment period for all individuals eligible
for Medicare by reason of disability who do not have End-Stage Renal
Disease.
   (3) Existing law guarantees an individual the issuance of a
Medicare supplement policy or contract when the employee's welfare
plan that provides health benefits that supplement the benefits under
Medicare terminates, or the plan ceases to provide all of those
supplemental health benefits to the individual.
   This bill would make the individual eligible if the plan ceases to
provide some, all, or substantially all of those supplemental health
benefits to the individual and the employer no longer provides the
individual with insurance that covers all of the payment for the Part
B 20% coinsurance.
   (4) Existing law guarantees an individual the issuance of a
Medicare supplement policy or contract when the individual, upon
first becoming eligible for benefits under Medicare Part A at age 65
years, enrolls in a Medicare+Choice plan under Medicare Part C, and
disenrolls from the plan by not later than 12 months after the
effective date of enrollment.
   This bill would permit the individual to postpone enrollment in
Medicare Part A or Part B while eligible for employer sponsored
coverage.
   (5) Existing law guarantees to specified eligible individuals the
issuance of a Medicare supplement policy or contract that has a
benefit package classified as plan A, B, C, or F offered by any
issuer.
   This bill would add at least one plan that includes coverage for
prescription medications as a guaranteed plan, as specified.
   (6) Existing law requires every insurer marketing Medicare
supplement insurance coverage in this state to follow specified
marketing practices relating to the sale of Medicare supplement
insurance coverage.
   This bill would require the Insurance Commissioner to annually
prepare a rate guide, as specified, that would cover all the Medicare
supplement insurance policies and Medicare supplement contracts sold
by each company that sells Medicare supplement insurance in
California.
   (7) Existing law provides for the regulation of Medicare
supplement contracts issued by health care service plans by the
Department of Managed Care, effective no later than July 1, 2000, or
earlier pursuant to an executive order of the Governor.  A willful
violation of the provisions governing Medicare supplement contracts
is a crime.
   Because a violation of this bill's requirements with respect to
Medicare supplement contracts would be a crime, this bill would
impose a state-mandated local program by creating a new crime.
  The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state.  Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for a specified reason.
   (8) The changes to existing law described in (1), (2), (3), (4),
(5), and (6) above would be accomplished by amending provisions of
law added by Senate Bill 764 of the 1999-2000 Regular Session.  These
amended provisions would only become operative if Senate Bill 764 of
the 1999-2000 Regular Session is enacted, becomes operative, and
this bill is chaptered after Senate Bill 764.  If these conditions
are met, these provisions would become operative on January 1, 2001.

   (9) This bill would also enact provisions requiring notice,
effective September 30, 2000, to certain individuals whose health
coverage will terminate effective January 1, 2001, that issuers of
Medicare supplement policies are required to offer and allow those
individuals to enroll in certain plans, if currently offered by the
issuer, that include coverage for prescription medications.  This
requirement would be repealed on January 1, 2001.
   (10) This bill would declare that it would take effect immediately
as an urgency statute.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 1358.11 of the Health and Safety Code, as added
by Senate Bill 764 of the 1999-2000 Regular Session, is amended to
read:
   1358.11.  (a) An issuer shall not deny or condition the offering
or effectiveness of any Medicare supplement contract available for
sale in this state, nor discriminate in the pricing of a contract
because of the health status, claims experience, receipt of health
care, or medical condition of an applicant in the case of an
application for a contract that is submitted prior to or during the
six-month period beginning with the first day of the first month in
which an individual is both 65 years of age or older and is enrolled
for benefits under Medicare Part B.  Each Medicare supplement
contract currently available from an issuer shall be made available
to all applicants who qualify under this subdivision and are 65 years
of age or older.  Medicare supplement contracts A, B, C, F, and at
least one letter-designated plan (H, I, or J, at the discretion of
the issuer) that includes coverage for prescription medications, if
currently available from an issuer, shall be made available to any
applicant who qualifies under this subdivision who is 64 years of age
or younger and who does not have End-Stage Renal Disease.  This
section does not prohibit an issuer in determining subscriber rates
from treating applicants who are under 65 years of age and are
eligible for Medicare Part B as a separate risk classification.
   (b) (1) If an applicant qualifies under subdivision (a) and
submits an application during the time period referenced in
subdivision (a) and, as of the date of application, has had a
continuous period of creditable coverage of at least six months, the
issuer shall not exclude benefits based on a preexisting condition.
   (2) If the applicant qualifies under subdivision (a) and submits
an application during the time period referenced in subdivision (a)
and, as of the date of application, has had a continuous period of
creditable coverage that is less than six months, the issuer shall
reduce the period of any preexisting condition exclusion by the
aggregate of the period of creditable coverage applicable to the
applicant as of the enrollment date.  The manner of the reduction
under this subdivision shall be as specified by the director.
   (c) Except as provided in subdivision (b) and Section 1358.23,
subdivision (a) shall not be construed as preventing the exclusion of
benefits under a contract, during the first six months, based on a
preexisting condition for which the enrollee received treatment or
was otherwise diagnosed during the six months before the coverage
became effective.
   (d) An individual enrolled in Medicare Part B by reason of
disability shall be entitled to open enrollment described in this
section for six months after he or she first becomes eligible for
Medicare Part B.  Sales during the open enrollment period shall not
be discouraged by any means, including the altering of the commission
structure.
   There shall be a one-time open enrollment period of 120 days
commencing on January 1, 2001, for all individuals eligible for
Medicare by reason of disability who do not have End-Stage Renal
Disease.
   (e) An individual who is 65 years of age or older and enrolled in
Medicare Part B is entitled to open enrollment described in this
section for six months following:
   (1) Receipt of a notice of termination or, if no notice is
received, the effective date of termination, from any
employer-sponsored health plan including an employer-sponsored
retiree health plan.  For purposes of this section,
"employer-sponsored retiree health plan" includes any coverage for
medical expenses that is directly or indirectly sponsored or
established by an employer for employees or retirees, their spouses,
dependents, or other included covered persons.
   (2) Termination of health care services for a military retiree or
the retiree's Medicare eligible spouse or dependent as a result of a
military base closure.
   (f) An individual who is 65 years of age or older and enrolled in
Medicare Part B is entitled to open enrollment described in this
section if the individual was covered under a policy, certificate, or
contract providing Medicare supplement coverage but that coverage
terminated because the individual established residence at a location
not served by the issuer.
   (g) (1) An individual who was previously enrolled in, but whose
coverage was terminated between September 1, 1998, and December 31,
1998, by a Medicare managed care plan shall be entitled to a new
60-day open enrollment period in addition to any open enrollment
authorized by federal law or regulations, for any and all Medicare
supplement coverage available on a guaranteed basis under state and
federal law or regulation for persons terminated by their Medicare
managed care plan.
   (2) The new open enrollment period specified in paragraph (1)
shall commence 90 days after January 1, 2000.  Within 30 days of
January 1, 2000, health plans shall notify their former Medicare
enrollees who were terminated during the period specified in
paragraph (1) of the new open enrollment period.  Health plan notices
shall inform the terminated enrollees of the opportunity to secure
advice and assistance from the Health Insurance Counseling and
Advocacy Program (HICAP) in their area, along with the toll-free
telephone number for HICAP.
   (3) An individual who was previously enrolled in but whose
coverage was terminated after January 1, 1999, by a Medicare managed
care plan shall be entitled to an additional 60-day open enrollment
period to be added on to and run consecutively after any open
enrollment period authorized by federal law or regulations, for any
and all Medicare supplement coverage available on a guaranteed basis
under state and federal law or regulations for persons terminated by
their Medicare managed care plan.
   (4) Health plans that terminate Medicare enrollees shall notify
those enrollees in the termination notice of the additional open
enrollment period authorized by this subdivision.  Health plan
notices shall inform enrollees of the opportunity to secure advice
and assistance from the Health Insurance Counseling Advocacy Program
(HICAP) in their area, along with the toll-free telephone number for
HICAP.
   (h) An individual shall be entitled to an annual open enrollment
period lasting 30 days or more, commencing with the individual's
birthday, during which time that person may purchase any Medicare
supplement coverage, with the exception of a Medicare Select
contract, that offers benefits equal to or lesser than those provided
by the previous coverage.  During this open enrollment period, no
issuer that falls under this provision shall deny or condition the
issuance or effectiveness of Medicare supplement coverage, nor
discriminate in the pricing of coverage, because of health status,
claims experience, receipt of health care, or medical condition of
the individual if, at the time of the open enrollment period, the
individual is covered under another Medicare supplement policy,
certificate, or contract.  An issuer that offers Medicare supplement
contracts shall notify an enrollee of his or her rights under this
subdivision at least 30 and no more than 60 days before the beginning
of the open enrollment period.
  SEC. 2.  Section 1358.12 of the Health and Safety Code, as added by
Senate Bill 764 of the 1999-2000 Regular Session, is amended to
read:
   1358.12.  (a) (1) With respect to the guaranteed issue of a
Medicare supplement contract, eligible persons are those individuals
described in subdivision (b) who apply to enroll under the contract
not later than 63 days after the date of the termination of
enrollment described in subdivision (b), and who submit evidence of
the date of termination or disenrollment with the application for a
Medicare supplement contract.
   (2) With respect to eligible persons, an issuer shall not deny or
condition the issuance or effectiveness of a Medicare supplement
contract described in subdivision (c) that is offered and is
available for issuance to new enrollees by the issuer, shall not
discriminate in the pricing of the Medicare supplement contract
because of health status, claims experience, receipt of health care,
or medical condition, and shall not impose an exclusion of benefits
based on a preexisting condition under the Medicare supplement
contract.
   (b) An eligible person is an individual described in any of the
following paragraphs:
   (1) The individual is enrolled under an employee welfare benefit
plan that provides health benefits that supplement the benefits under
Medicare, and the plan terminates, or the plan ceases to provide
some, all, or substantially all of those supplemental health benefits
to the individual and the employer no longer provides the individual
with insurance that covers all of the payment for the Part B 20
percent coinsurance.
   (2) The individual is enrolled with a Medicare+Choice organization
under a Medicare+Choice plan under Medicare Part C, and any of the
following apply:
   (A) The organization's or plan's certification, under this part,
has been terminated or the organization has terminated or otherwise
discontinued providing the plan in the area in which the individual
resides.
   (B) The individual is no longer eligible to elect the plan because
of a change in the individual's place of residence or other change
in circumstances specified by the secretary, but not including
termination of the individual's enrollment on the basis described in
Section 1851(g)(3)(B) of the federal Social Security Act, where the
individual has not paid premiums on a timely basis or has engaged in
disruptive behavior as specified in standards under Section 1856 of
that act, or the plan is terminated for all individuals within a
residence area.
   (C) The individual demonstrates, in accordance with guidelines
established by the director, either of the following:
   (i) The organization offering the plan substantially violated a
material provision of the organization's contract under this article
in relation to the individual, including the failure to provide an
enrollee on a timely basis medically necessary care for which
benefits are available under the plan or the failure to provide the
covered care in accordance with applicable quality standards.
   (ii) The organization, or agent or other entity acting on the
organization's behalf, materially misrepresented the plan's
provisions in marketing the plan to the individual.
   (D) The individual meets other exceptional conditions as the
director may provide.
   (3) The individual meets both of the following conditions:
   (A) The individual is enrolled with any of the following:
   (i) An eligible organization under a contract under Section 1876
of the federal Social Security Act (Medicare risk or cost).
   (ii) A similar organization operating under demonstration project
authority, effective for periods before April 1, 1999.
   (iii) An organization under an agreement under Section 1833(a)(1)
(A) of the federal Social Security Act (health care prepayment plan).

   (iv) An organization under a Medicare Select policy.
   (B) The individual's enrollment ceases under the same
circumstances that would permit discontinuance of an individual's
election of coverage under the first sentence of Section 1851(e)(4)
of the federal Social Security Act as delineated in paragraph (2) of
subdivision (b).
   (4) The individual is enrolled under a Medicare supplement
contract and the enrollment ceases because of the following:  the
insolvency of the issuer or bankruptcy of the nonissuer organization;
the involuntary termination of coverage or enrollment under the
contract; the issuer of the contract substantially violated a
material provision of the contract; or the issuer, or an agent or
other entity acting on the issuer's behalf, materially misrepresented
the contract's provisions in marketing the contract to the
individual.
   (5) The individual meets both of the following conditions:
   (A) The individual was enrolled under a Medicare supplement
contract and terminates enrollment and subsequently enrolls, for the
first time, with any Medicare+Choice organization under a
Medicare+Choice plan under Medicare Part C, any eligible organization
under a contract under Section 1876 of the federal Social Security
Act (Medicare risk or cost), any similar organization operating under
demonstration project authority, an organization under an agreement
under Section 1833(a)(1)(A) of the federal Social Security Act
(health care prepayment plan), or a Medicare Select contract.
   (B) The subsequent enrollment under subparagraph (A) is terminated
by the enrollee during any period within the first 12 months of the
subsequent enrollment (during which the enrollee is permitted to
terminate the subsequent enrollment under Section 1851(e) of the
federal Social Security Act).
   (6) The individual, upon first becoming eligible for benefits
under Medicare Part A at age 65 years, or who postpones enrollment in
Medicare Part A or Part B while eligible for employer-sponsored
coverage and is older than age 65 years, and enrolls in a
Medicare+Choice plan under Medicare Part C, and disenrolls from the
plan by not later than 12 months after the effective date of
enrollment.
   (c) (1) Under paragraphs (1), (2), (3), and (4) of subdivision
(b), eligible persons are entitled to a Medicare supplement contract
that has a benefit package classified as plan A, B, C, F, and at
least one letter-designated plan (H, I, or J, at the discretion of
the issuer) that includes coverage for prescription medications, if
currently available from an issuer.
   (2) Under paragraph (5) of subdivision (b), eligible persons are
entitled to the same Medicare supplement contract in which they were
most recently previously enrolled, if available from the same issuer,
or, if not so available, a contract described in paragraph (1) of
subdivision (c).
   (3) Under paragraph (6) of subdivision (b), eligible persons are
entitled to any Medicare supplement contract offered by any issuer.
   (d) (1) At the time of an event described in subdivision (b)
because of which an individual loses coverage or benefits due to the
termination of a contract or agreement, policy, or plan, the
organization that terminates the contract or agreement, the issuer
terminating the contract, or the administrator of the plan being
terminated, respectively, shall notify the individual of his or her
rights under this section, and of the obligations of issuers of
Medicare supplement contracts under subdivision (a).  That notice
shall be communicated contemporaneously with the notification of
termination.
   (2) At the time of an event described in subdivision (b) because
of which an individual ceases enrollment under a contract or
agreement, policy, or plan, the organization that offers the contract
or agreement, regardless of the basis for the cessation of
enrollment, the issuer offering the contract, or the administrator of
the plan, respectively, shall notify the individual of his or her
rights under this section, and of the obligations of issuers of
Medicare supplement contracts under subdivision (a).  That notice
shall be communicated within ten working days of the issuer receiving
notification of disenrollment.
  SEC. 2.5.  Section 1358.22 is added to the Health and Safety Code,
to read:
   1358.22.  (a) (1) With respect to the guaranteed issue of a
Medicare supplement contract, eligible persons are those individuals
described in subdivision (b) who apply to enroll under the contract
not later than 63 days after the date of the termination of
enrollment described in subdivision (b), and who submit evidence of
the date of termination or disenrollment with the application for a
Medicare supplement contract.
   (2) With respect to eligible persons, an issuer shall not deny or
condition the issuance or effectiveness of a Medicare supplement
contract described in subdivision (c) that is offered and is
available for issuance to new enrollees by the issuer, shall not
discriminate in the pricing of the Medicare supplement contract
because of health status, claims experience, receipt of health care,
or medical condition, and shall not impose an exclusion of benefits
based on a preexisting condition under the Medicare supplement
contract.
   (b) An eligible person is an individual described in any of the
following paragraphs:
   (1) The individual is enrolled under an employee welfare benefit
plan that provides health benefits that supplement the benefits under
Medicare, and the plan terminates, or the plan ceases to provide
some, all, or substantially all of those supplemental health benefits
to the individual and the employer no longer provides the individual
with insurance that covers all of the payment for the Part B
20-percent coinsurance.
   (2) The individual is enrolled with a Medicare+Choice organization
under a Medicare+Choice plan under Medicare Part C, and any of the
following apply:
   (A) The organization's or plan's certification, under this part,
has been terminated or the organization has terminated or otherwise
discontinued providing the plan in the area in which the individual
resides.
   (B) The individual is no longer eligible to elect the plan because
of a change in the individual's place of residence or other change
in circumstances specified by the secretary, but not including
termination of the individual's enrollment on the basis described in
Section 1851(g)(3)(B) of the federal Social Security Act, where the
individual has not paid premiums on a timely basis or has engaged in
disruptive behavior as specified in standards under Section 1856 of
that act, or the plan is terminated for all individuals within a
residence area.
   (C) The individual demonstrates, in accordance with guidelines
established by the director, either of the following:
   (i) The organization offering the plan substantially violated a
material provision of the organization's contract under this article
in relation to the individual, including the failure to provide an
enrollee on a timely basis medically necessary care for which
benefits are available under the plan or the failure to provide the
covered care in accordance with applicable quality standards.
   (ii) The organization, or agent or other entity acting on the
organization's behalf, materially misrepresented the plan's
provisions in marketing the plan to the individual.
   (D) The individual meets other exceptional conditions as the
director may provide.
   (3) The individual meets both of the following conditions:
   (A) The individual is enrolled with any of the following:
   (i) An eligible organization under a contract under Section 1876
of the federal Social Security Act (Medicare risk or cost).
   (ii) A similar organization operating under demonstration project
authority, effective for periods before April 1, 1999.
   (iii) An organization under an agreement under Section 1833(a)(1)
(A) of the federal Social Security Act (health care prepayment plan).

   (iv) An organization under a Medicare Select policy.
   (B) The individual's enrollment ceases under the same
circumstances that would permit discontinuance of an individual's
election of coverage under the first sentence of Section 1851(e)(4)
of the federal Social Security Act as delineated in paragraph (2) of
subdivision (b).
   (4) The individual is enrolled under a Medicare supplement
contract and the enrollment ceases because of the following:  the
insolvency of the issuer or bankruptcy of the nonissuer organization;
the involuntary termination of coverage or enrollment under the
contract; the issuer of the contract substantially violated a
material provision of the contract; or the issuer, or an agent or
other entity acting on the issuer's behalf, materially misrepresented
the contract's provisions in marketing the contract to the
individual.
   (5) The individual meets both of the following conditions:
   (A) The individual was enrolled under a Medicare supplement
contract and terminates enrollment and subsequently enrolls, for the
first time, with any Medicare+Choice organization under a
Medicare+Choice plan under Medicare Part C, any eligible organization
under a contract under Section 1876 of the federal Social Security
Act (Medicare risk or cost), any similar organization operating under
demonstration project authority, an organization under an agreement
under Section 1833(a)(1)(A) of the federal Social Security Act
(health care prepayment plan), or a Medicare Select contract.
   (B) The subsequent enrollment under subparagraph (A) is terminated
by the enrollee during any period within the first 12 months of the
subsequent enrollment (during which the enrollee is permitted to
terminate the subsequent enrollment under Section 1851(e) of the
federal Social Security Act).
   (6) The individual, upon first becoming eligible for benefits
under Medicare Part A at age 65 years, or who postpones enrollment in
Medicare Part A or Part B while eligible for employer-sponsored
coverage and is older than age 65 years, and enrolls in a
Medicare+Choice plan under Medicare Part C, and disenrolls from the
plan by not later than 12 months after the effective date of
enrollment.
   (c) (1) Under paragraphs (1), (2), (3), and (4) of subdivision
(b), eligible persons are entitled to a Medicare supplement contract
that has a benefit package classified as plan A, B, C, F, and at
least one letter-designated plan (H, I, or J, at the discretion of
the issuer) that includes coverage for prescription medications, if
currently available from an issuer.
   (2) Under paragraph (5) of subdivision (b), eligible persons are
entitled to the same Medicare supplement contract in which they were
most recently previously enrolled, if available from the same issuer,
or, if not so available, a contract described in paragraph (1) of
subdivision (c).
   (3) Under paragraph (6) of subdivision (b), eligible persons are
entitled to any Medicare supplement contract offered by any issuer.
   (d) (1) At the time of an event described in subdivision (b)
because of which an individual loses coverage or benefits due to the
termination of a contract or agreement, policy, or plan, the
organization that terminates the contract or agreement, the issuer
terminating the contract, or the administrator of the plan being
terminated, respectively, shall notify the individual of his or her
rights under this section, and of the obligations of issuers of
Medicare supplement contracts under subdivision (a).  That notice
shall be communicated contemporaneously with the notification of
termination.  Effective September 30, 2000, for terminations
effective January 1, 2001, that notice shall also inform the
individual that issuers are required to offer and allow individuals
to enroll, during the application period following notification, in
at least one letter-designated plan (H, I, or J, at the discretion of
the issuer) that includes coverage for prescription medications, if
currently available from an issuer.  That coverage would be effective
on January 1, 2001.
   (2) At the time of an event described in subdivision (b) because
of which an individual ceases enrollment under a contract or
agreement, policy, or plan, the organization that offers the contract
or agreement, regardless of the basis for the cessation of
enrollment, the issuer offering the contract, or the administrator of
the plan, respectively, shall notify the individual of his or her
rights under this section, and of the obligations of issuers of
Medicare supplement contracts under subdivision (a).  That notice
shall be communicated within 10 working days of the issuer receiving
notification of disenrollment.
  (e) This section shall remain in effect only until January 1, 2001,
and as of that date is repealed, unless a later enacted statute,
that is enacted before January 1, 2001, deletes or extends that date.

  SEC. 3.  Section 10192.11 of the Insurance Code, as added by Senate
Bill 764 of the 1999-2000 Regular Session, is amended to read:
   10192.11.  (a) An issuer shall not deny or condition the issuance
or effectiveness of any Medicare supplement policy or certificate
available for sale in this state, nor discriminate in the pricing of
a policy or certificate because of the health status, claims
experience, receipt of health care, or medical condition of an
applicant in the case of an application for a policy or certificate
that is submitted prior to or during the six-month period beginning
with the first day of the first month in which an individual is both
65 years of age or older and is enrolled for benefits under Medicare
Part B.  Each Medicare supplement policy and certificate currently
available from an issuer shall be made available to all applicants
who qualify under this subdivision and are 65 years of age or older.
Medicare supplement contracts A, B, C, F, and at least one
letter-designated plan (H, I, or J, at the discretion of the issuer)
that includes coverage for prescription medications, if currently
available from an issuer, shall be made available to any applicant
who qualifies under this subdivision who is 64 years of age or
younger and who does not have End-Stage Renal Disease.  This section
does not prohibit an issuer in determining premium rates from
treating applicants who are under 65 years of age and are eligible
for Medicare Part B as a separate risk classification.  This section
shall not be construed as preventing the exclusion of benefits for
preexisting conditions as defined in paragraph (1) of subdivision (a)
of Section 10192.8.
   (b) (1) If an applicant qualifies under subdivision (a) and
submits an application during the time period referenced in
subdivision (a) and, as of the date of application, has had a
continuous period of creditable coverage of at least six months, the
issuer shall not exclude benefits based on a preexisting condition.
   (2) If the applicant qualifies under subdivision (a) and submits
an application during the time period referenced in subdivision (a)
and, as of the date of application, has had a continuous period of
creditable coverage that is less than six months, the issuer shall
reduce the period of any preexisting condition exclusion by the
aggregate of the period of creditable coverage applicable to the
applicant as of the enrollment date.  The manner of the reduction
under this subdivision shall be as specified by the commissioner.
   (c) Except as provided in subdivision (b) and Section 10192.23,
subdivision (a) shall not be construed as preventing the exclusion of
benefits under a policy, during the first
                  six months, based on a preexisting condition for
which the policyholder or certificate holder received treatment or
was otherwise diagnosed during the six months before the coverage
became effective.
   (d) An individual enrolled in Medicare Part B by reason of
disability will be entitled to open enrollment described in this
section for six months after he or she first becomes eligible for
Medicare Part B.  Every issuer shall make available to every
applicant qualified for open enrollment all policies and certificates
offered by that issuer at the time of application.  Issuers shall
not discourage sales during the open enrollment period by any means,
including the altering of the commission structure.
   There shall be a one-time open enrollment period of 120 days
commencing on January 1, 2001, for all individuals eligible for
Medicare by reason of disability who do not have End-Stage Renal
Disease.
   (e) An individual who is 65 years of age or older and enrolled in
Medicare Part B is entitled to open enrollment described in this
section for six months following:
   (1) Receipt of a notice of termination or, if no notice is
received, the effective date of termination, from any
employer-sponsored health plan including an employer-sponsored
retiree health plan.  For purposes of this section,
"employer-sponsored retiree health plan" includes any coverage for
medical expenses that is directly or indirectly sponsored or
established by an employer for employees or retirees, their spouses,
dependents, or other included insureds.
   (2) Termination of health care services for a military retiree or
the retiree's Medicare eligible spouse or dependent as a result of a
military base closure.
   (f) An individual who is 65 years of age or older and enrolled in
Medicare Part B is entitled to open enrollment described in this
section if the individual was covered under a policy, certificate, or
contract providing Medicare supplement coverage but that coverage
terminated because the individual established residence at a location
not served by the plan.
   (g) (1) An individual who was previously enrolled in but whose
coverage was terminated between September 1, 1998, and December 31,
1998, by a Medicare managed care plan shall be entitled to a new
60-day open enrollment period in addition to any open enrollment
authorized by federal law or regulations, for any and all Medicare
supplement coverage provided by Medicare supplement insurers and
available on a guaranteed basis under state and federal law or
regulations for persons terminated by their Medicare managed care
plan.
   (2) The new open enrollment period specified in paragraph (1)
shall commence 90 days after January 1, 2000.
   (3) An individual who was previously enrolled in but whose
coverage was terminated after January 1, 1999, by a Medicare managed
care plan shall be entitled to an additional 60-day open enrollment
period to be added on to and run consecutively after any open
enrollment period authorized by federal law or regulations, for any
and all Medicare supplement coverage provided by Medicare supplement
insurers and available on a guaranteed basis under state and federal
law or regulations for persons terminated by their Medicare managed
care plan.  An individual shall be entitled to an annual open
enrollment period lasting 30 days or more, commencing with the
individual's birthday, during which time that person may purchase any
Medicare supplement policy, with the exception of a Medicare Select
policy, that offers benefits equal to or lesser than those provided
by the previous coverage.  During this open enrollment period, no
issuer that falls under this provision shall deny or condition the
issuance or effectiveness of Medicare supplement coverage, nor
discriminate in the pricing of coverage, because of health status,
claims experience, receipt of health care, or medical condition of
the individual if, at the time of the open enrollment period, the
individual is covered under another Medicare supplement policy or
contract.  An issuer shall notify a policyholder of his or her rights
under this subdivision at least 30 and no more than 60 days before
the beginning of the open enrollment period.
  SEC. 4.  Section 10192.12 of the Insurance Code, as added by Senate
Bill 764 of the 1999-2000 Regular Session, is amended to read:
   10192.12.  (a) (1) With respect to the guaranteed issue of a
Medicare supplement policy, eligible persons are those individuals
described in subdivision (b) who apply to enroll under the policy not
later than 63 days after the date of the termination of enrollment
described in subdivision (b), and who submit evidence of the date of
termination or disenrollment with the application for a Medicare
supplement policy.
   (2) With respect to eligible persons, an issuer shall not deny or
condition the issuance or effectiveness of a Medicare supplement
policy described in subdivision (c) that is offered and is available
for issuance to new enrollees by the issuer, shall not discriminate
in the pricing of such a Medicare supplement policy because of health
status, claims experience, receipt of health care, or medical
condition, and shall not impose an exclusion of benefits based on a
preexisting condition under such a Medicare supplement policy.
   (b) An eligible person is an individual described in any of the
following paragraphs:
   (1) The individual is enrolled under an employee welfare benefit
plan that provides health benefits that supplement the benefits under
Medicare, and the plan terminates, or the plan ceases to provide
some, all, or substantially all of those supplemental health benefits
to the individual and the employer no longer provides the individual
with insurance that covers all of the payment for the Part B
20-percent coinsurance.
   (2) The individual is enrolled with a Medicare+Choice organization
under a Medicare+Choice plan Medicare Part C, and any of the
following apply:
   (A) The organization's or plan's certification, under this part,
has been terminated or the organization has terminated or otherwise
discontinued providing the plan in the area in which the individual
resides.
   (B) The individual is no longer eligible to elect the plan because
of a change in the individual's place of residence or other change
in circumstances specified by the secretary, but not including
termination of the individual's enrollment on the basis described in
Section 1851(g)(3)(B) of the federal Social Security Act, where the
individual has not paid premiums on a timely basis or has engaged in
disruptive behavior as specified in standards under Section 1856 of
that act, or the plan is terminated for all individuals within a
residence area.
   (C) The individual demonstrates, in accordance with guidelines
established by the commissioner, either of the following:
   (i) The organization offering the plan substantially violated a
material provision of the organization's contract under this article
in relation to the individual, including the failure to provide an
enrollee on a timely basis medically necessary care for which
benefits are available under the plan or the failure to provide the
covered care in accordance with applicable quality standards.
   (ii) The organization, or agent or other entity acting on the
organization's behalf, materially misrepresented the plan's
provisions in marketing the plan to the individual.
   (D) The individual meets other exceptional conditions as the
commissioner may provide.
   (3) The individual meets both of the following conditions:
   (A) The individual is enrolled with any of the following:
   (i) An eligible organization under a contract under Section 1876
of the federal Social Security Act (Medicare risk or cost).
   (ii) A similar organization operating under demonstration project
authority, effective for periods before April 1, 1999.
   (iii) An organization under an agreement under Section 1833(a)(1)
(A) of the federal Social Security Act (health care prepayment plan).

   (iv) An organization under a Medicare Select policy.
   (B) The individual's enrollment ceases under the same
circumstances that would permit discontinuance of an individual's
election of coverage under the first sentence of Section 1851(e)(4)
of the federal Social Security Act as delineated in paragraph (2) of
subdivision (b).
   (4) The individual is enrolled under a Medicare supplement policy
and the enrollment ceases because of the following:  the insolvency
of the issuer or bankruptcy of the nonissuer organization; the
involuntary termination of coverage or enrollment under the policy;
the issuer of the policy substantially violated a material provision
of the policy; or the issuer, or an agent or other entity acting on
the issuer's behalf, materially misrepresented the policy's
provisions in marketing the policy to the individual.
   (5) The individual meets both of the following conditions:
   (A) The individual was enrolled under a Medicare supplement policy
and terminates enrollment and subsequently enrolls, for the first
time, with any Medicare+Choice organization under a Medicare+Choice
plan under Medicare Part C, any eligible organization under a
contract under Section 1876 of the federal Social Security Act
(Medicare risk or cost), any similar organization operating under
demonstration project authority, an organization under an agreement
under Section 1833(a)(1)(A) of the federal Social Security Act
(health care prepayment plan), or a Medicare Select policy.
   (B) The subsequent enrollment under subparagraph (A) is terminated
by the enrollee during any period within the first 12 months of the
subsequent enrollment (during which the enrollee is permitted to
terminate the subsequent enrollment under Section 1851(e) of the
federal Social Security Act).
   (6) The individual, upon first becoming eligible for benefits
under Medicare Part A at age 65 years, or who postpones enrollment in
Medicare Part A or Part B while eligible for employer-sponsored
coverage and is older than age 65 years, and enrolls in a
Medicare+Choice plan under Medicare Part C, and disenrolls from the
plan by not later than 12 months after the effective date of
enrollment.
   (c) (1) Under paragraphs (1), (2), (3), and (4) of subdivision
(b), eligible persons are entitled to a Medicare supplement policy
that has a benefit package classified as plan A, B, C, F, and at
least one letter-designated plan (H, I, or J, at the discretion of
the issuer) that includes coverage for prescription medications, if
currently available from an  issuer.
   (2) Under paragraph (5) of subdivision (b), eligible persons are
entitled to the same Medicare supplement policy in which they were
most recently previously enrolled, if available from the same issuer,
or, if not so available, a policy described in paragraph (1) of
subdivision (c).
   (3) Under paragraph (6) of subdivision (b), eligible persons are
entitled to any Medicare supplement policy offered by any issuer.
   (d) (1) At the time of an event described in subdivision (b)
because of which an individual loses coverage or benefits due to the
termination of a contract or agreement, policy, or plan, the
organization that terminates the contract or agreement, the issuer
terminating the policy, or the administrator of the plan being
terminated, respectively, shall notify the individual of his or her
rights under this section, and of the obligations of issuers of
Medicare supplement policies under subdivision (a).  That notice
shall be communicated contemporaneously with the notification of
termination.
   (2) At the time of an event described in subdivision (b) because
of which an individual ceases enrollment under a contract or
agreement, policy, or plan, the organization that offers the contract
or agreement, regardless of the basis for the cessation of
enrollment, the issuer offering the policy, or the administrator of
the plan, respectively, shall notify the individual of his or her
rights under this section, and of the obligations of issuers of
Medicare supplement policies under subdivision (a).  That notice
shall be communicated within ten working days of the issuer receiving
notification of disenrollment.
  SEC. 5.  Section 10192.20 of the Insurance Code, as added by Senate
Bill 764 of the 1999-2000 Regular Session, is amended to read:
   10192.20.  (a) An issuer, directly or through its producers, shall
do each of the following:
   (1) Establish marketing procedures to ensure that any comparison
of policies by its agents or other producers will be fair and
accurate.
   (2) Establish marketing procedures to ensure that excessive
insurance is not sold or issued.
   (3) Display prominently by type, stamp, or other appropriate
means, on the first page of the policy, the following:

   "Notice to buyer:  This policy may not cover all of your medical
expenses."

   (4) Inquire and otherwise make every reasonable effort to identify
whether a prospective applicant for a Medicare supplement policy
already has health insurance and the types and amounts of that
insurance.
   (5) Establish auditable procedures for verifying compliance with
this subdivision.
   (b) In addition to the practices prohibited by this code or any
other law, the following acts and practices are prohibited:
   (1) Twisting, which means knowingly making any misleading
representation or incomplete or fraudulent comparison of any
insurance policies or insurers for the purpose of inducing or tending
to induce, any person to lapse, forfeit, surrender, terminate,
retain, pledge, assign, borrow on, or convert an insurance policy or
to take out a policy of insurance with another insurer.
   (2) High pressure tactics, which means employing any method of
marketing having the effect of or tending to induce the purchase of
insurance through force, fright, threat, whether explicit or implied,
or undue pressure to purchase or recommend the purchase of
insurance.
   (3) Cold lead advertising, which means making use directly or
indirectly of any method of marketing which fails to disclose in a
conspicuous manner that a purpose of the method of marketing is the
solicitation of insurance and that contact will be made by an
insurance agent or insurance company.
   (c) The terms "Medicare supplement," "Medicare Wrap-Around" and
words of similar import shall not be used unless the policy is issued
in compliance with this article.  The term "medigap" shall not be
used.
   (d) The commissioner each year shall prepare a rate guide for
Medicare supplement insurance and Medicare supplement contracts.  The
commissioner each year shall make the rate guide available on or
before the date of the fall Medicare annual open enrollment.  The
rate guide shall include all of the following for each company that
sells Medicare supplemental insurance or Medicare supplement
contracts in California:
   (1) A listing of all the policies, plans A through J, that are
available from the company.
   (2) A listing of all the policies, plans A through J, for Medicare
beneficiaries under the age of 65 that are available from the
company.
   (3) The toll-free telephone number of the company that consumers
can use to obtain information from the company.
   (4) Sample rates for each policy listed pursuant to paragraphs (1)
and (2).  The sample rates shall be for ages 0-65, 65, 70, 75, and
80.
   (5) The premium rate methodology for each policy listed pursuant
to paragraphs (1) and (2). "Premium rate methodology" means attained
age, issue age, or community rated.
   (6) The waiting period for preexisting conditions for each policy
listed pursuant to paragraphs (1) and (2).
   (e) The consumer rate guide prepared pursuant to subdivision (d)
shall be distributed using all of the following methods:
   (1) Through Health Insurance Counseling and Advocacy Program
(HICAP) offices.
   (2) By telephone, using the department's consumer toll-free
telephone number.
   (3) On the department's Internet web site.
   (4) In addition to the distribution methods described in
paragraphs (1) to (3), inclusive, each insurer that markets Medicare
supplement insurance or Medicare supplement contracts in this state
shall provide on the application form a statement that reads as
follows:  "A rate guide is available that compares the policies sold
by different insurers.  You can obtain a copy of this rate guide by
calling the Department of Insurance's consumer toll-free telephone
number (1-800-927-HELP), by calling the Health Insurance Counseling
and Advocacy Program (HICAP) toll-free telephone number
(1-800-434-0222), or by accessing the Department of Insurance's
Internet web site (www.insurance.ca.gov)."
  SEC. 5.5.  Section 10194.9 is added to the Insurance Code, to read:

   10194.9.  (a) (1) With respect to the guaranteed issue of a
Medicare supplement policy, eligible persons are those individuals
described in subdivision (b) who apply to enroll under the policy not
later than 63 days after the date of the termination of enrollment
described in subdivision (b), and who submit evidence of the date of
termination or disenrollment with the application for a Medicare
supplement policy.
   (2) With respect to eligible persons, an issuer shall not deny or
condition the issuance or effectiveness of a Medicare supplement
policy described in subdivision (c) that is offered and is available
for issuance to new enrollees by the issuer, shall not discriminate
in the pricing of such a Medicare supplement policy because of health
status, claims experience, receipt of health care, or medical
condition, and shall not impose an exclusion of benefits based on a
preexisting condition under such a Medicare supplement policy.
   (b) An eligible person is an individual described in any of the
following paragraphs:
   (1) The individual is enrolled under an employee welfare benefit
plan that provides health benefits that supplement the benefits under
Medicare, and the plan terminates, or the plan ceases to provide
some, all, or substantially all of those supplemental health benefits
to the individual and the employer no longer provides the individual
with insurance that covers all of the payment for the Part B
20-percent coinsurance.
   (2) The individual is enrolled with a Medicare+Choice organization
under a Medicare+Choice plan Medicare Part C, and any of the
following apply:
   (A) The organization's or plan's certification, under this part,
has been terminated or the organization has terminated or otherwise
discontinued providing the plan in the area in which the individual
resides.
   (B) The individual is no longer eligible to elect the plan because
of a change in the individual's place of residence or other change
in circumstances specified by the secretary, but not including
termination of the individual's enrollment on the basis described in
Section 1851(g)(3)(B) of the federal Social Security Act, where the
individual has not paid premiums on a timely basis or has engaged in
disruptive behavior as specified in standards under Section 1856 of
that act, or the plan is terminated for all individuals within a
residence area.
   (C) The individual demonstrates, in accordance with guidelines
established by the commissioner, either of the following:
   (i) The organization offering the plan substantially violated a
material provision of the organization's contract under this article
in relation to the individual, including the failure to provide an
enrollee on a timely basis medically necessary care for which
benefits are available under the plan or the failure to provide the
covered care in accordance with applicable quality standards.
   (ii) The organization, or agent or other entity acting on the
organization's behalf, materially misrepresented the plan's
provisions in marketing the plan to the individual.
   (D) The individual meets other exceptional conditions as the
commissioner may provide.
   (3) The individual meets both of the following conditions:
   (A) The individual is enrolled with any of the following:
   (i) An eligible organization under a contract under Section 1876
of the federal Social Security Act (Medicare risk or cost).
   (ii) A similar organization operating under demonstration project
authority, effective for periods before April 1, 1999.
   (iii) An organization under an agreement under Section 1833(a)(1)
(A) of the federal Social Security Act (health care prepayment plan).

   (iv) An organization under a Medicare Select policy.
   (B) The individual's enrollment ceases under the same
circumstances that would permit discontinuance of an individual's
election of coverage under the first sentence of Section 1851(e)(4)
of the federal Social Security Act as delineated in paragraph (2) of
subdivision (b).
   (4) The individual is enrolled under a Medicare supplement policy
and the enrollment ceases because of the following:  the insolvency
of the issuer or bankruptcy of the nonissuer organization; the
involuntary termination of coverage or enrollment under the policy;
the issuer of the policy substantially violated a material provision
of the policy; or the issuer, or an agent or other entity acting on
the issuer's behalf, materially misrepresented the policy's
provisions in marketing the policy to the individual.
   (5) The individual meets both of the following conditions:
   (A) The individual was enrolled under a Medicare supplement policy
and terminates enrollment and subsequently enrolls, for the first
time, with any Medicare+Choice organization under a Medicare+Choice
plan under Medicare Part C, any eligible organization under a
contract under Section 1876 of the federal Social Security Act
(Medicare risk or cost), any similar organization operating under
demonstration project authority, an organization under an agreement
under Section 1833(a)(1)(A) of the federal Social Security Act
(health care prepayment plan), or a Medicare Select policy.
   (B) The subsequent enrollment under subparagraph (A) is terminated
by the enrollee during any period within the first 12 months of the
subsequent enrollment (during which the enrollee is permitted to
terminate the subsequent enrollment under Section 1851(e) of the
federal Social Security Act).
   (6) The individual, upon first becoming eligible for benefits
under Medicare Part A at age 65 years, or who postpones enrollment in
Medicare Part A or Part B while eligible for employer-sponsored
coverage and is older than age 65 years, and enrolls in a
Medicare+Choice plan under Medicare Part C, and disenrolls from the
plan by not later than 12 months after the effective date of
enrollment.
   (c) (1) Under paragraphs (1), (2), (3), and (4) of subdivision
(b), eligible persons are entitled to a Medicare supplement policy
that has a benefit package classified as plan A, B, C, F, and at
least one letter-designated plan (H, I, or J, at the discretion of
the issuer) that includes coverage for prescription medications, if
currently available from an issuer.
   (2) Under paragraph (5) of subdivision (b), eligible persons are
entitled to the same Medicare supplement policy in which they were
most recently previously enrolled, if available from the same issuer,
or, if not so available, a policy described in paragraph (1) of
subdivision (c).
   (3) Under paragraph (6) of subdivision (b), eligible persons are
entitled to any Medicare supplement policy offered by any issuer.
   (d) (1) At the time of an event described in subdivision (b)
because of which an individual loses coverage or benefits due to the
termination of a contract or agreement, policy, or plan, the
organization that terminates the contract or agreement, the issuer
terminating the policy, or the administrator of the plan being
terminated, respectively, shall notify the individual of his or her
rights under this section, and of the obligations of issuers of
Medicare supplement policies under subdivision (a).  That notice
shall be communicated contemporaneously with the notification of
termination.  Effective September 30, 2000, for terminations
effective January 1, 2001, that notification shall also inform the
individual that issuers must offer and allow individuals to enroll,
during the application period following notification, in at least one
letter-designated plan (H, I, or J, at the discretion of the issuer)
that includes coverage for prescription medications, if currently
available from an issuer.  That coverage would be effective January
1, 2001.
   (2) At the time of an event described in subdivision (b) because
of which an individual ceases enrollment under a contract or
agreement, policy, or plan, the organization that offers the contract
or agreement, regardless of the basis for the cessation of
enrollment, the issuer offering the policy, or the administrator of
the plan, respectively, shall notify the individual of his or her
rights under this section, and of the obligations of issuers of
Medicare supplement policies under subdivision (a).  That notice
shall be communicated within 10 working days of the issuer receiving
notification of disenrollment.
  (e) This section shall remain in effect only until January 1, 2001,
and as of that date is repealed, unless a later enacted statute,
that is enacted before January 1, 2001, deletes or extends that date.

  SEC. 6.  No reimbursement is required by this act pursuant to
Section 6 of Article XIIIB of the California Constitution because the
only costs that may be incurred by a local agency or school district
will be incurred because this act creates a new crime or infraction,
eliminates a crime or infraction, or changes the penalty for a crime
or infraction, within the meaning of Section 17556 of the Government
Code, or changes the definition of a crime within the meaning of
Section 6 of Article XIIIB of the California Constitution.
  SEC. 7.  Sections 1, 2, 3, 4, and 5 of this act shall not  become
operative unless Senate Bill 764 of the 1999-2000 Regular Session is
enacted and becomes operative, and this act is chaptered after Senate
Bill 764.  In that case, those sections shall become operative on
January 1, 2001.
  SEC. 8.  This act is an urgency statute necessary for the immediate
preservation of the public peace, health, or safety within the
meaning of Article IV of the Constitution and shall go into immediate
effect.  The facts constituting the necessity are:
   In order to require timely notification of certain persons whose
health care coverage may be terminated effective January 1, 2001,
relative to their rights to enroll in Medicare supplement insurance
plans that offer coverage for prescription medications, it is
necessary that this act take effect immediately.
